By
Jeff Prestridge
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Chancellor: George Osborne will deliver the Budget on Wednesday
More in hope than in expectation am I presenting Chancellor George Osborne with my wish list for Wednesday’s Budget:
WISH 1: An overhaul of stamp duty for home buyers, bringing to an end the ridiculous situation where if you buy a home for £250,000 (the average house price in England and Wales is £258,000), you pay stamp duty of 1 per cent, a total of £2,500.
But if you buy at £250,001, the tax jumps to £7,500 because the higher 3 per cent rate is applied on the whole purchase price, not just on the amount above the £250,000 threshold for the 1 per cent charge.
The ‘slab’ structure of stamp duty is unfair and it inhibits people from moving up the housing ladder. The £125,000 starting point also kicks in far too early, and the tax distorts the housing market at the thresholds where the higher taxes start.
It is a tax ripe for reform.
WISH 2: A big leap in the level at which 40 per cent tax begins (currently, £41,450). It cannot be right that by the time the next General Election comes around, Osborne will have dragged more than one million people into the 40p in the pound tax bracket for the first time.
Lord Lawson, who introduced the 40p tax rate in 1988, says ‘it was intended for the rich, the well-off’ while ‘the people who are paying it today are middling professionals who should not be in the higher rate’.
Lord Lamont, another former Chancellor, also believes that the tax threshold should be raised, warning that unless action is taken ‘you will end up with a situation where 40 per cent becomes the basic rate’. He concluded: ‘That is complete nonsense.’
Spot on. Some 4.4 million people – one in six taxpayers – now pay 40 per cent income tax, most of whom would not consider themselves well off by any stretch of the imagination.
Many have lost their entitlement to child benefit and must now wait longer for their State Pension.
Their tax burden should be falling, not increasing – especially under a Conservative-led Government.
WISH 3: A liberalisation of the rules governing tax-friendly Isas. If Osborne really wants us all to save more and become financially independent he should set Isas free.
He could do this easily by removing the silly restriction that prevents people from transferring equity Isas into cash Isas – a step many people would like to make as they approach retirement and become more risk averse.
He should also remove the cap on how much can be put into a cash Isa, allowing savers to use their maximum Isa allowance (£11,880 in the tax year starting April 6) to put money on deposit with a bank or building society.
In light of the meagre returns from cash savings, such a move would demonstrate that the Government does value those who strive to save.
WISH 4: A commitment from Osborne that he will not interfere again with our pensions (private, not State) for as long as he is in the job (pre or post-Election).
In recent years, Governments have undermined pensions by either launching tax raids (as Gordon Brown did in 1997) or restricting the benefits that can be taken at retirement (as evidenced by the looming reduction in the lifetime allowance to £1.25million).
The result, aided and abetted by rapacious providers, is widespread disenchantment among investors.
Only last week, Shadow Chancellor Ed Balls said he would restrict pensions tax relief for higher earners to pay for a plan aimed at getting youngsters back into work.
It is high time politicians called a halt to pension meddling. Of course, go after benefit cheats and tax evaders (corporations especially) but stop dashing hard working people’s retirement dreams.
WISH 5: Retail investors must be given a better deal as companies clamour to float on the London Stock Exchange.
Since September last year, about 70 companies have floated – but only one in seven has made shares available to retail investors in the initial offering.
Adam Searle, chief executive of broker Interactive Investor, says it is wrong that on the one hand the public is being told to save more and on the other it is being excluded from participating in the flotation of household names.
This is a result of City greed and onerous, expensive regulatory duties imposed on those firms that offer a retail prospectus. Osborne could ask the regulator to look at this. Margaret Thatcher certainly would have done.
As I said, these are wishes. Not for the first time, I expect to be disappointed.
Comments (5)
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Blainy,
Didcot, United Kingdom,
1 hour ago
Myabe I could summarise the comments so far as “why doesn’t the chancellor do something for me”. I’ve heard it time after time in the recovery. “We need to cut spending”, the goevernment says and most sensible people nod. So we have to close your …..(fill in something that affects YOU). “No, no, no, you can’t cut THAT spending. Cut something else.”
Blimey, I just hope he doesn’t hurt me agin, because I’m in the ‘fortunate’ position of earning enough to have lost my Child Benefit (but not remtoely enough to be considered rich), and every income tax change to help the lower paid has been deducted from the highe rate threshhold. Result: less and less disposable income (like the millions of pensioners). Even the despicable salary sacrifice scheme my company has implemented only saved me a fiver a month. I have taken all this on the chin in the hope that we have a chance of a future in the UK. So please people, think about the bigger picture and not just your own little bugbear.
CameronOut,
InTwentyFifteen, United Kingdom,
2 hours ago
‘WISH 4: A commitment from Osborne that he will not interfere again with our pensions (private, not State) for as long as he is in the job (pre or post-Election)’. So the DM thinks it is perfectly ok for the government to rob public sector workers of their pensions!!!!!! What a disgrace this rag is, and what a disgrace the idiots who write the columns in it are.
CameronOut,
InTwentyFifteen, United Kingdom,
2 hours ago
‘WISH 4: A commitment from Osborne that he will not interfere again with our pensions (private, not State) for as long as he is in the job (pre or post-Election)’. So the DM thinks it is perfectly ok for the government to rob public sector workers of their pensions!!!!!! What a disgrace this rag is.
Observer,
Chester, United Kingdom,
2 hours ago
How about reforming council tax. Why should you be exempt just because you share a home? Relating payment to income/ability to pay would also help. It is by far the most unfair and despicable tax.
indespair,
reading, United Kingdom,
13 hours ago
He should honour his promises of 2009 to help savers
Millions of pensioners rely heavily on savings income and thats been savaged 70% over the ladt 5 years and they are in dire situation
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JEFF PRESTRIDGE: Dear George, here are five Budget wishes
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